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Macro Chapter 8
Term | Definition |
---|---|
deflation | condition occurring when overall prices fall |
consumer price index (CPI) | a measure of the price level based on the consumption patterns of a typical consumer |
chained CPI | a measure of the consumer price index in which the typical consumer's "basket" of goods and services considered is updated monthly |
shoe-leather costs | the resources that are wasted when people change their behavior to avoid holding money |
money illusion | the interpretation of nominal changes in wages or prices as real changes |
nominal wage | a worker's wage expressed in current dollars |
real wage | the nominal wage adjusted for changes in the price level |
output | the product that the firm creates |
capital gains taxes | taxes on the gains realized by selling an asset for more than its purchase price |
equation of exchange | an equation that specifies the long-run relationship between the money supply, the price level, real GDP, and the velocity of money |
velocity of money | the number of times a unit of money exchanges hands in a given year |